BusinessMirror October 11, 2019

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THE refueling and logistics oiler USNS John Ericsson leaves Subic Bay, in the Subic Bay Freeport Zone. DREAMSTIME.COM

BREAKING THE PERKS STANDOFF DTI chief favors inclusion of safety net for potential Citira ‘casualties’ in ecozones

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By Elijah Felice Rosales

HE Department of Trade and Industry (DTI) will be asking lawmakers to put up a cash fund that will be used to provide monthly allowance to workers that economic zone firms will lay off to manage the removal of their fiscal incentives.

Trade Secretary Ramon M. Lopez said he is in favor of including a safety net in the Corporate Income Tax and Incentives Rationalization Act (Citira) bill. This will come in the form of monthly allowance to be allocated for workers who might end up jobless as a consequence of investors leaving the Philippines upon lifting of tax perks. “If a safety net is placed [in the Citira bill], it will not go to the firms, but to the affected workers. If a worker is able to prove he lost work because of the measure, the

government can use the cash fund to subsidize the worker until he gets hired. The allowance can last maybe from three months to six months,” Lopez told the BusinessMirror. “The allowance should be enough to get the worker and his family going for a few months—if at all there is a safety net, which I find reasonable. It should be inserted in the Citira bill, just to be safe should there really be job losses,” he added. Lopez said economic offices,

including the DTI, could do the computation on how much the cash fund should be, as well as the amount of the monthly allowance.

Transition scenario

ESTIMATES by the Joint Foreign Chambers of the Philippines (JFC) put job losses at above 700,000 if the Citira bill is passed into law as proposed by the House of Representatives. These job losses will come as casualties of the Citira bill’s component on rationalization of incentives granted to firms

operating in economic zones. The Department of Finance (DOF) disputes this number. Locators, mostly multinationals, warned they would be compelled to pack up operations here and relocate to another Southeast Asian country if their incentives, particularly the 5-percent tax on gross income earned (GIE) that is paid in lieu of all local and national taxes, are stripped away. If the government can no longer shoulder another cash transfer Continued on a2

A third of the world’s consumers are suddenly nervous to spend By Ari Altstedter, Carolynn Look & Qian Ye

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of hundreds in the mall selling phones, laptops and other gadgets. “In the past, people changed phones as soon as the new model came out. Now they change their phones according to their need.” He said profits have fallen by half in the past two months. Gurnaney and He are emblematic of the deepening retail gloom in India and China, home to 2.8 billion people, or more than a third of the world’s consumers. Makers of everything from cars to shampoo had pinned their hopes for growth on one or both of these Asian giants, and the effects of the double slowdown are rippling out across the world.

Bloomberg News

OWN the street from Mumbai’s grand colonial-era Royal Opera House, Deepak Gurnaney sits in his small electronics shop in front of rows of flat-screen TVs flashing Hindi-soap operas, while his four staff play with their phones. There are no customers. The 68-year-old used to need a machine to count the cash brought in by the business his father founded, and a warehouse nearby to keep enough stock. With business down 25 percent the past two years, he’s got rid of both. “The car market is down, this market is down, that market is down, so people see that and think they should not spend,” he says. “Retail trade being the way it is, I

cannot encourage anyone in my family to join this business. I will be the last generation.” Nearly 3,000 miles away, in the fluorescent-lighted sprawl of Beijing’s Zhongguancun Kemao electronics mall, He Hongyuan is singing a similar tune. “These days consumers tend to be more careful with their spending,” He says from behind the counter of his glass booth, one

PESO EXCHANGE RATES n US 51.6890

Global headwind

CHILDREN have their picture taken during the Golden Week holidays in Beijing on October 2, 2019. KEVIN FRAYER/GETTY IMAGES

“THEY’LL probably remain the largest and most promising consumer markets out there, but this slowdown is still a headwind for a global economy that is already struggling,” said Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc. in Hong Kong. China indicated growth year Continued on a2

n JAPAN 0.4788 n UK 64.3270 n HK 6.5916 n CHINA 7.2648 n SINGAPORE 37.6029 n AUSTRALIA 34.9469 n EU 56.8993 n SAUDI ARABIA 13.7815

Source: BSP (October 11, 2019 )


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